overview of the situation in the Russian banking sector in January 2020


© RIA Novosti Ilya Pitalev

RIA Rating – 28 Feb. The Russian banking sector at the end of the first month of 2020 was characterized by a slight decrease in the assets, but for January this is a relatively ordinary event and is associated with the calendar factor. According to the Bank of Russia, the volume of assets during the month decreased by 0.2% in nominal and 0.5% in real terms. For comparison, in January 2019, the decline in real terms amounted to 1.1%, and in January 2018, – of -0.8%. Thus, although the dynamics of assets in 2020 was negative, but was better than the same periods of the previous two years. According to experts RIA Rating, the actual dynamics of the assets in the coming months will return to positive growth rates.

In General a rolling 12-month period, ended February 1, 2020, assets of banks increased by 4.8% in nominal terms and by 5.8% in real terms. For comparison, a year earlier, the increase in real terms on a 12 month rolling interval was significantly more – at 6.6%. The decline in real growth on the previous year largely due to the slowdown in the growth of lending to legal entities and individuals.

The dynamics of lending to the economy in January was quite weak. The volume of credits to economy increased by 0.4% in nominal and 0.1% in real terms. For comparison, from January 2019 actual growth rate did not fall below 0.4%, and in some months the growth was less than 1%. It should be noted that the latest reduction in lending to the economy was observed in February 2017 (-0,5%). Thus, in January 2020, the dynamics of lending to the economy was the worst in nearly three years. A rolling 12 month period (1 February 2020) lending to the economy increased in real terms by 7.9%. For comparison, on February 1, 2019 (12 months) growth in credit to the economy accounted for 10.9%. According to experts RIA Rating, the slowdown in growth in January and a rolling 12 month interval associated with a reduction in the rate of growth of retail lending, among other things due to the securitisation of the mortgage portfolio, and also due to regulatory action by the Central Bank to cool the market unsecured loans. Also it should be noted that corporate lending in recent months is characterized by unstable dynamics from month to month.

Lending to individuals in January continued to slow down. According to the Bank of Russia, the volume of consumer loans in January increased by 0.8% against the growth by 1% and 1.3% in December and November respectively. Thus, the third consecutive month slowdown in growth. However, as mentioned above, the slowdown in growth in recent months due to several securitisation transactions of loan portfolios and the policies of the Central Bank of the Russian Federation on the cooling of the unsecured lending market. Also the conditions in January were added to the calendar factor. On a sliding 12 month period, which ended February 1, retail lending in real terms increased by 18% and 20.7% and 23% on 1 October and 1 February 2019. Experts RIA Rating, I expect the trend of slowing retail lending will continue in 2020, and the growth rate for the year may slow down to 13-15%.

Loans for legal entities (nonfinancial institutions) in January was characterized by small growth in nominal terms, and similar rates of decline in real. The volume of loans issued to legal entities for the first month of the year increased in nominal terms 0.2% and in real terms, there was a decrease of 0.2%. However, even this small decline was the weakest result since December 2018. In General, a rolling 12-month period, as of February 1, the increase in corporate loans in real terms was 3.5% vs +5.6% for the same date in 2019. It is worth noting that the slowdown in the growth of corporate lending is largely due to the change of policy companies to Finance their activities through borrowed funds. In particular, in recent months, large companies prefer loans issue of bonds, rates of attraction through which significantly less. The volume of corporate bond debt outstanding, according to estimates of RIA Rating, in 2019 increased by more than 1.1 trillion rubles, while in 2018, the company actively repay the old editions than put new. Experts of RIA Rating expects that the development of the capital market in 2020 will be somewhat slow corporate Bank lending, and increasingly shift the focus of banks on the retail market. Thus, the rate of growth of corporate lending in 2020 will remain low.

Passive base of the Russian banking sector in January was characterized by a decrease of deposits and funds on accounts of legal entities. the Volume of funds on accounts of legal entities and deposits for the first month of 2020 in real terms declined by 0.1% and 1.5% respectively. It is worth noting that the dynamics in nominal terms, was slightly better. So, the deposits for the month fell by 1.2%, and the volume of funds on accounts of legal entities increased by 0.5%. The decrease of deposits in the beginning of the year is not the first year and due to increased spending in the holiday period. 

The profit of the Russian banking sector in January of this year was very high. The volume of the banks ' profit within the first month of the year amounted to 223 billion rubles, the second best monthly result in history. While the historical maximum was observed relatively recently – in January 2019, the results of which banks earned 264 billion. It should be noted that the result of the first month of 2019 was distorted by the transition to the new accounting standards, and real income, according to estimates of RIA Rating was less than 160 billion rubles. Thus, a profit the first month of 2020 can be considered a historical high. According to experts RIA Rating, high profitability of the banking sector was the result of currency revaluation to the weakening of the ruble, and improve the quality of the loan portfolio. In General, the sliding interval over the 12 months, as of February 1, the profit dropped a little below 2 trillion rubles. Experts of RIA Rating expects that in the coming months, the profit will decrease relative to the January record result.

The situation with revocation of banking licenses in January-February were moderately good. So, in less than two months, was forcibly withdrawn four licences against eight in December and November, and compared with the one their licenses revoked in September-October. The total volume of banks ' assets, forcibly deprived of licenses in January and February, according to estimates of RIA Rating, amounted to 20 billion rubles to 30 billion rubles in December and November. The largest Bank, which lost its license in December, was NBCBank. The volume of its assets amounted to 13 billion rubles (the Bank held the 179-th place in the ranking by assets on December 1, 2019). According to experts RIA Rating, in 2020 the number of reviews will continue to decline.

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Source: 1prime.ru

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